Gold Bulls Expand as Billionaire Paulson Buys Metal: Commodities

Gold traders are the most bullish in six weeks as investors boosted their bullion holdings to a record on concern that economic growth is slowing and after billionaires John Paulson and George Soros bought more metal.
Fourteen of 26 analysts surveyed by Bloomberg expect prices to rise next week and six were bearish. A further six were neutral, making the proportion of bulls the highest since July 6. Paulson raised his stake in the SPDR Gold Trust, the biggest gold-backed exchange-traded product, by 26 percent in the second quarter and Soros more than doubled his holding, U.S. Securities and Exchange Commission filings showed Aug. 14. Global holdingsreached a record on Aug. 10, data compiled by Bloomberg show.

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One kilogram gold bars. Photographer: Chris Ratcliffe/Bloomberg

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Aug. 17 (Bloomberg) -- Mark O'Byrne, executive director of GoldCore Ltd., talks about the outlook for gold prices and the merits of purchasing the physical metal over derivative products. He speaks from Dublin with Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)

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Aug. 16 (Bloomberg) -- Julien Garran, an analyst at UBS AG, talks about the outlook for gold, grains and oil. He speaks with Mark Barton on Bloomberg Television's "The Pulse." (Source: Bloomberg)

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Aug. 16 (Bloomberg) -- Marcus Grubb, managing director of investment research at the World Gold Council, discusses the outlook for gold demand and prices. He speaks with Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)

Audio Download: Paulson, Soros Added to Gold Stakes as Prices Fell, 8/14

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Gold traders are the most bullish in six weeks as investors boosted their bullion holdings to a record on concern economic growth is slowing and after billionaires John Paulson and George Soros bought more metal. Photographer: Chris Ratcliffe/Bloomberg

The euro-area contracted in the second quarter after the worsening debt crisis forced at least six nations into recessions, European Union data showed Aug. 14. Gold bar and coin purchases jumped 15 percent in Europe in the period, the World Gold Council said yesterday. U.S. growth cooled in the three months through June and China’s slowdown may extend into a seventh quarter after export growth collapsed in July and industrial production and lending missed economists’ forecasts.
“The monetary affairs of the world probably play the most important role for gold prices going forward,” said Thorsten Polleit, chief economist at Degussa Goldhandel GmbH, a precious metal trading and investment company in Frankfurt. “The slowing economy will boost calls for easier monetary policy. This is adding a further boost to gold.”

Gold Prices

Gold rose 3.3 percent to $1,618 an ounce on the Comex inNew York this year, extending 11 consecutive annual gains. That compares with a 3.5 percent gain in the Standard & Poor’s GSCI gauge of 24 commodities and an 8.6 percent advance in the MSCI All-Country World Index (MXWD) of equities. Treasuries returned 1.1 percent, a Bank of America Corp. index shows.
European gold bar and coin demand rose to 77.6 metric tons in the latest quarter and jewelry demand should pick up in Asiaduring the second half on seasonal wedding and festival purchases, the London-based gold council said. Investors bought about $1.1 billion of gold through ETPs this month and held a record 2,417.3 tons on Aug. 10, data show.
Paulson & Co., which owns the biggest stake in the SPDR Gold Trust, increased its holdings to 21.8 million shares in the three months through June. The New York-based $21 billion hedge fund firm had more than 44 percent of its U.S. traded equities tied to bullion, or 16 percent excluding the SPDR Gold Trust product, the filing showed. Paulson uses his stake in the product to back shares that are denominated in gold.
Soros Fund Management LLC raised its stake to 884,400 shares. Spokesmen for both investors declined to comment earlier this week.